Leftfield Pictures founder and CEO Brent Montgomery sold his first reality show in 2008. In 2009, he had his first unscripted hit with Pawn Stars. By 2012, he had drawn the attention of some of the larger European companies that had begun gobbling up U.S. independent producers to serve as portfolio pieces.
“I’ve always been entrepreneurial,” Montgomery says. “I thought, ‘Instead of selling, why can’t I become one of the buyers?’”
So he did. In 2013, Leftfield bought Sirens Media (The Real Housewives of New Jersey), then partnered with producer Nick Rigg (House Hunters International) to form Loud TV and with producer Jodi Flynn (Hoarders) to form Outpost Entertainment—placing all three companies under the umbrella Leftfield Entertainment. The companies touted it as the first acquisition of one American indie TV producer by another and the first time a U.S. deal was financed entirely by a syndicate of banks. (The deal’s value was not disclosed, but it was led by Barclays, with RBS Citizens and SunTrust also in the mix.)
Montgomery has not been alone in his deal spree. In the world of independent reality-television production houses—which has generated some of TV’s biggest unscripted hits in recent years, including the highest-rated unscripted series in cable history, Duck Dynasty—the hot trend is not a particular format. It’s consolidation.
This month, Discovery Communications reached an agreement to purchase U.K. production house Raw. In February, Warner Bros. Television Group agreed to pay a reported $273 million for the international operations of independent producer Eyeworks. Last September, ITV Studios International created a U.S. group to cover the three American studios it had bought the previous year.
“Everyone’s been selling,” says Craig Piligian, president and CEO of Pilgrim Studios, which produced the long-running American Chopper for Discovery network and the recently debuted Lindsay for OWN. “Running for the hills. They’re running, and they’re all working under a British flag, or a German flag, or in some cases an American flag.”
As with any such deal, cash on the table is the primary motivator for producers forging partnerships with large production groups. But there are other factors at play, too. Whether the move to consolidate is a positive or a negative for those companies that choose to do so depends on whether whom you ask has made such a move. Piligian, whose company has not, explains the thinking behind the growth of the large production groups.
“They feel there’s strength in numbers,” he says. “If you have a group, they’ll say, ‘OK, we have nine shows at your network. You don’t get this show unless we retain the rights to this other show.’ It does, in some sense, give them a lot of bargaining power to retain more of their rights.”
He continues: “It’s hogwash, by the way. No one is bigger than Discovery. They’re always going to beat you.”
Gurney Productions, the company behind Duck Dynasty, was one of three U.S. companies—followed by High Noon Entertainment and Thinkfactory Media—to recently sell a stake in the company to ITV. The transaction, in December 2012, gave ITV 61% ownership of Gurney in exchange for $40 million. According to founder Scott Gurney, rights aren’t the only issue in such deals.
“When we were going through the process of partnering with someone, every meeting we took, the story was different,” he says. “Every company that buys these independent production companies has a different strategy. Some are looking to roll them up into one and resell. Some are looking to truly grow the brand into a long-term larger production entity. Some are just looking to sit back and collect profits.”
But whether or not size equals leverage, studios are realizing that they can sometimes make more off of international rights, merchandizing rights and other ancillary rights that had in the past been signed over to the networks than they can off of what the networks pay them to produce the show. Tara Long, senior VP of alternative programming at Entertainment One and executive producer of WE tv’s Mary Mary, believes that increased scope has led to greater power for producers.
“I think it’s changing,” she says. “There’s a lot of ways to make money off television shows besides just getting a fee.”
Long claims that Entertainment One has been able to retain international rights on several projects currently in development with networks, thanks to the company’s existing international distribution framework. The new super-indies hope to emulate the success that European companies have had in owning and exporting titles and formats.
Last August’s season 4 Duck Dynasty premiere drew 11.8 million viewers—the largest live-plussame- day audience for an unscripted show in cable TV history. The season 5 premiere Jan. 15 drew 8.5 million. Along with record ratings, the show has birthed a spectacularly successful line of merchandise, with more than 85 licensing partners and products available in department stores, specialty retailers and drug and grocery stores. Retail sales have been estimated by industry analysts at nearly half a billion dollars.
But branded hunting vests can’t make a show watchable. It all starts with the format. Unscripted producers have long depended on new formats to reinvigorate the marketplace, triggering demand for similar programming. Duck Dynasty, though wildly successful, represents only a slight variation on the docu-soap genre that has thrived on cable for years.
Montgomery predicts that the next huge unscripted series likewise won’t break any new format ground. “I think Duck Dynasty is a good example of that,” he says. “That show on paper doesn’t sound like a game-changer. It was more in the execution of the show, and I think that’s where we’ll see continued success in the future.” While docu-soaps thrive on cable, they have yet to take root on the broadcast networks. One reason is that the broadcast model doesn’t make it easy for networks to run marathons of shows—a go-to tactic for cable networks looking to drive an audience to a new series.
But change could be coming. Three of the Big Four networks hired new reality chiefs last year. Of those three, two came from cable networks. Prior to joining ABC, Lisa Berger was programming president at E! Entertainment. Fox’s Simon Andreae previously served as senior VP of development and production for Discovery.
The influx of executive talent from the cable world coupled with the ratings success of recent cable shows could inspire the broadcast networks to expand their horizons.
“They’ve basically told us that they’re looking for some docu,” Montgomery says. “They have to at least try it. Right now they’re being told constantly, ‘Why couldn’t we have done Duck Dynasty?’ So I think their commissioners are going to at least take a few swings.”
But Montgomery adds that he is skeptical about the results. “I think the chance of success for a docu-soap on a network is pretty remote,” he says. “But that doesn’t mean they won’t try it.”
Long is more optimistic. “They’ll just have to be broad,” she says. “The Osbournes maybe could have worked [on broadcast]. A lot of networks always reference that show. Or Run’s House. Those big, successful docu-series that aren’t too edgy or too niche, that are broad enough with compelling characters that are really relatable.”
But not everyone is bullish on the Duck Dynasty model. In February, Eugene Young was named the new president of Ryan Seacrest Productions—a company that found success in the docu-soap genre with Keeping Up With the Kardashians and its various spinoffs.
“The market currently boasts several vocational docu-soaps that capture the dysfunction of familyrun businesses,” he says. “The good news is that they work, as everyone loves family drama and there are high stakes. The bad news is there’s a lot of them.”
Search for Some Middle Ground
In addition to being a proven success, the docudrama format is relatively easy for new producers to attempt. That, coupled with high demand from networks constantly expanding their original programming slates, has created an abundance of new content suppliers. Even as established indies partner up to form larger organizations, smaller newbies continue to join the game.
“There’s a high demand for unscripted programming, and as a result there are a lot of smaller, scrappy companies getting into the business because the cost of entry is lower than it was a decade ago,” Young says.
Piligian puts it more bluntly. “Some guy with a video camera says, ‘Hey, these are interesting people,’ shoots it, takes it to a Realscreen event, gets it in front of some low-level executive at a network and says, ‘Look at my three minutes,’” Piligian says. “That executive looks at it and says ‘Wow, where did you find them?’ ‘Oh, I don’t know, on the west side of Savannah, Ga., in some alley.’ We can’t find those people, because we don’t live near some alley in Georgia. So they get their show.”
As a result, independent production companies now find themselves part of a shrinking middle class, with major groups and super-indies continuing to grow in size, and small upstarts continuing to proliferate. But demand remains on the rise as well.
“There’s always new platforms and new areas to sell content and new windows,” Long says. “So I feel like there’s always going to be a demand for nonscripted TV, just because the financial model works so well for buyers.”
The ever-increasing number of content suppliers and platforms looking for content creates additional risks, however.
“The talent pool across the network and production side has been spread very, very thin,” Montgomery says. “So the quality of unscripted has been tested.”
When Leftfield acquired Sirens, Montgomery added to his portfolio a proven producer of female-targeted content. His partnerships with Rigg and Flynn were likewise aimed at working with producers established in genres that Leftfield was not already well-represented in.
That strategy is another driving force behind the industry’s consolidation. With so much content competing for audience attention, established producers hope that the networks will turn to companies with proven reputations to help them penetrate the noise and capture audiences.
For the super-indies and large groups, that means acquiring and partnering with proven known quantities. For independents that have not yet joined forces with another company, the hope is that their track records will carry them through the next shift in the marketplace.
“I think that the larger groups are going to collapse,” Piligian says. “I think that’s what’s going to happen in about five years. All these companies that have collected so much and amassed so much are just going to start collapsing under the weight of what they’ve amassed.”
Long disagrees. She joined Entertainment One in 2009 to launch the unscripted arm of a company that already had divisions in film, scripted television and music. She has built her division largely on the company’s reputation in other markets and on creating synergies across divisions.
“There’s a lot of big companies that control a lot more of the market space,” Long says. “So it’s pretty tough for smaller production companies to really have as much volume as the bigger studios or the larger corporate companies that have international presence.”
Asked if she thus foresees more of those independent production companies becoming parts of larger wholes, Long offers a one-word answer.
“Yes,” she says.